Radio France Internationale (RFI) Chinese Edition recently reported that Mainland companies that trade publicly in the Hong Kong Stock Exchange are establishing branches of the Chinese Communist Party. Chinese President Xi Jinping has required that state-owned companies must “strengthen the party leadership.” In the past one and a half years, 123 Mainland companies have formalized the party structure in their company charters and have given operational rights and financial interests to the CCP branches. These are about 5.43 percent of all companies publicly traded in Hong Kong. Some of these companies even put it in writing that, in case there is a conflict of interest between the party and the shareholders, the party’s interest has a higher priority. Market analysts pointed out that it is highly questionable whether or not the old “hidden rules” could just be legalized like that. It is even more ridiculous for the Hong Kong Stock Exchange to have allowed this to happen. Eight of the 123 companies are Hong Kong’s Hang Seng Index constituent stocks. Further research showed that the amended company charters typically require one percent of the company’s total compensation cost to be used for Party branch activities. For critical decisions, the party branch must discuss and agree first, and then the decisions will be passed on to the board for voting.
Source: RFI Chinese, September 26, 2018